2020: A Year of Dramatic Change in the Satellite Industry

Industry-watchers could almost get whiplash looking at how 2020 has progressed. Think about everything that happened just in the first half of the year: the FCC made its final decision on a C-band spectrum clearing offer in February; the pandemic hit the United States and shut down spaceports in March; and the subsequent Intelsat and OneWeb bankruptcies happened shortly after.

The second half of the year started with rumblings that Comtech’s acquisition of Gilat, which would have formed one of the largest ground systems entities in the world, was about to fall apart. And throughout all of these events, a steady drumbeat of Starlink satellites were launched into space, making a future of constellations in Low Earth Orbit look more like a reality with each launch. Here is a look back at the most significant satellite industry news developments we covered during one of the most tumultuous years in recent memory.

Historic MEV-1 Mission Validates In-Orbit Servicing in GEO

In February, Northrop Grumman and its subsidiary SpaceLogistics made history by docking two commercial satellites in orbit — and opening up possibilities of a new market of in-orbit servicing in Geostationary Orbit. The Mission Extension Vehicle-1 (MEV-1) docked with Intelsat 901 (IS-901), a communications satellite running low on fuel. This marked the first time mission extension services were executed in Geostationary Orbit (GEO).

The docking was no small feat — the two vehicles rendezvoused and successfully docked while moving at approximately 7,000 miles per hour. From there, MEV-1 uses its own thrusters and fuel supply to extend the satellite's lifespan by performing station-keeping maneuvers. MEV-1 will provide five years of life extension services to IS-901. And, it’s a multi-use vehicle and can move on to service other satellites after.

As changes to satellite services put pricing pressure on operators, extending the life of aging satellites allows operators to maximize their value and earn revenue from their satellites for longer. And the second Mission Extension Vehicle, MEV-2 is on its way to dock with Intelsat 10-02 in the coming year, and SpaceLogistics is working to establish a fleet of satellite servicing vehicles — a new frontier in satellite life extension services.

Satellite Operators Take the FCC’s C-Band Deal

2020 saw the conclusion of a years-long fight over C-band spectrum in the United States. The C-band — mid-band spectrum from 3.4 gigahertz to 3.7 gigahertz — has long been reserved for satellite operators, which use the band to provide broadcast and other services. But as far back as World Radiocommunication Conference 2003, terrestrial operators have wanted the spectrum for next-generation services.

After the FCC announced its intent to take action on the C-band in 2017, the industry was expecting a favorable result as Intelsat, SES, Telesat and Eutelsat joined forces in the C-Band Alliance to lobby for a market-based approach to clearing the spectrum. But at the end of 2019, FCC Chairman Ajit Pai threw the industry a curve ball, announcing the FCC would go with a public auction instead. It’s been reported that a phone call from President Donald Trump to Pai was all it took to change the course of the auction.

In the end, FCC voted 3-2 in February to repurpose the spectrum, deciding that satellite operators are required to clear the spectrum, and the FCC will hold a public auction for licenses to that spectrum. Satellite operators with licenses for the spectrum will receive both compensation for the cost to relocate the spectrum and accelerated relocation payments to incentivize them to clear the spectrum quickly, all totalling $9.7 billion divided between Intelsat, SES, Telesat, Eutelsat, and Star One. This came despite objections from Democrats on the FCC. Jessica Rosenworcel, in particular, questioned the FCC’s ability to set a specific incentive payment not negotiated between the parties in the auction.

Analysts said the nearly $10 billion deal wasn’t a bad outcome for the operators, given the declining nature of the revenues generated in the C-band. And the industry agreed, because operators agreed to move forward on the FCC’s timeline. But it has set off drama between SES and Intelsat, former comrades in the C-Band Alliance, in dueling filings in Intelsat’s bankruptcy case (more on that later.)

The clearing process is bringing billions of dollars into the U.S. space industry as the operators are investing clearing costs into orders from U.S. companies. Northrop Grumman, Boeing, and Maxar have received orders to build replacement satellites, and SpaceX and ULA have received launch contracts. The auction, which is expected to generate tens of billions of dollars for the U.S. Treasury, starts in December.

From Liftoff to Chapter 11: OneWeb Files for Bankruptcy

OneWeb’s bankruptcy was an absolute shocker of the year. The company was due to close a funding round the week of the SATELLITE show in March, but lead investor Softbank could not complete the funding round. This all happened as the COVID-19 pandemic was spreading across the globe, and the U.S. was heading into lockdown.

Whispers started spreading that OneWeb was going into bankruptcy, but the operator went forward with a successful launch of 34 satellites by Arianespace, bringing the number of satellites in its Low-Earth Orbit (LEO) constellation to 74. A source told Via Satellite at the time that just an hour before the launch, news filtered through the company that Softbank had decided to pull funding.

The news was shocking as OneWeb, backed by SoftBank’s massive venture capital might, was one of the leaders in the industry in the movement to use LEO satellites to provide low-latency internet from space. Earlier in the year, OneWeb and Airbus had opened the OneWeb Satellites high-speed satellite production facility in Florida.

But that was not the end of the story for OneWeb. After possibilities that Eutelsat, Telesat, or even Amazon could buy out the constellation, the United Kingdom government was the one to step up to the plate as part of a consortium with Bharti Global Limited, investing $500 million each. Hughes Network Services later joined the consortium with a $50 million investment. The sale was approved in early October, and OneWeb is preparing to resume launching satellites with Arianespace by the end of the year. The company plans to complete the deployment of its constellation by the end of 2022, and start commercial services by the end of 2021.

But the key question remains — What will the United Kingdom do with OneWeb? And if OneWeb continues on its mission to provide internet from Low-Earth Orbit, can it compete with players like SpaceX Starlink and Amazon Kuiper? Will OneWeb become the crown jewel in the United Kingdom’s New Space efforts?

Too Big to Fail? Intelsat Enters Chapter 11

One could say the story of Intelsat’s bankruptcy began when the company was purchased by four private equity firms in 2004. Observers commented that Intelsat’s bankruptcy in 2020 was in the cards for a while with the amount of legacy debt the operator carried, which wasn’t fixed by the 2013 IPO, and even foreshadowed by the failures of Intelsat-29e and Intelsat-27.

But the particular moment that Intelsat chose to file set the stage for a dramatic moment. On Feb. 5, the day before Chairman Pai released the details of the FCC’s public auction proposal to clear the C-band, Bloomberg Law reported that Intelsat had hired a law firm to explore filing for bankruptcy if its compensation wasn’t increased. Yet Intelsat did not file at the time.

The filing finally came on May 13, in a very upbeat announcement for a company filing for bankruptcy, called “Intelsat Onward.” There were questions at the time if the filing and a potential stay on Intelsat’s assets could throw a wrench in the C-band auction, but Intelsat maintained from the beginning that the goal of the filing was to front costs in order to clear the C-band. And as we know now, the operator elected to clear the C-band on the FCC’s timeline.

“This is a stage-managed orchestration with $1 billion of debtor-in-possession funding already committed. This will see Intelsat through the C-band process, which will see it (hopefully) secure the $4.8 billion in accelerated relocation payments, and onto a future as a rehabilitated Lazarus walking a few years down the track,” Jeffries analyst Giles Thorne said at the time, summing it up.

The operator is already making moves for the future, and was even able to get its acquisition of Gogo’s Commercial Aviation division approved. In an interview with Via Satellite earlier this year, CCO Samer Halawi touted Intelsat’s creditors approving the deal, and talked about the future growth and capacity efficiencies Intelsat sees in a vertically integrated In-Flight Connectivity (IFC) model. The bankruptcy case is still ongoing so it remains to be seen how Intelsat might be different coming out of Chapter 11.

COVID-19 Pandemic Disrupts Space Industry on Earth

The COVID-19 pandemic is indisputably the defining factor of 2020, as it has taken lives around the world, upended global economies, disrupted the way the world works. While many of the satellite industry’s assets are in space, the effects on Earth were very real. In March, companies had to adjust to remote work when possible, and adapting to socially distanced, masked work when necessary to keep mission-critical operations going.

The industry saw a few casualties, and OneWeb and Intelsat named the pandemic as a contributing factor to their bankruptcy filings. But it went beyond those already discussed, with antenna company Phasor Solutions, Australian operator Speedcast and IFC provider Global Eagle all filing for bankruptcy. The pandemic also kept space assets on the ground, as Arianespace and Rocket Lab saw their spaceports completely shut down for a time due to local regulations.

The full effect of the pandemic remains to be seen, as it’s still playing out. But it’s led to delays in product debuts, satellite deliveries, launch vehicle maiden flights, and startup funding rounds. At the same time, it’s also shown how satellite and aerospace technology are critical infrastructure as aerospace companies retooled to make ventilators, and satellite provided critical connectivity to keep people connected for remote work, school, and health care.

A Star(link Constellation) is Born

At the beginning of the year, SpaceX had launched just over around 100 Starlink satellites, but over 2020 the company has really built out its Starlink constellation which it plans to provide internet to unserved and underserved areas around the world. As of early November, SpaceX has executed 12 Starlink launches in 2020, and 16 total, bringing the total Starlinks launched to more than 860, making SpaceX the operator with the largest satellite fleet.

And while SpaceX is famously secretive, the recent launch of its “Better Than Nothing Beta” revealed some information, setting user expectations that they will see data speeds between 50 megabits per second to 150 megabits per second, at latency from 20 milliseconds to 40 milliseconds, and sometimes no connectivity at all. And we got our first glimpse of the phased array user terminal, which users will purchase for $500. Also this year, the company answered a question on the mind of many satellite engineers, revealing that some Starlink satellites are equipped with inter-satellite links. SpaceX says once fully deployed, the links will make Starlink one of the fastest options to transfer data around the world.

Just as Founder and Chief Engineer Elon Musk splits his time between SpaceX, Tesla, and other ventures like Neuralink — the company itself has other pressing priorities — like safely transporting NASA astronauts to the ISS, and developing its mega, interplanetary rocket Starship to realize Musk’s dreams of Mars.

SpaceX talks a big game about Starlink’s capabilities to upend rural broadband market and bridge the digital divide but the coming year will be telling as public beta tests continue and the constellation moves into commercial service. Musk was blunt about the challenge ahead in March at the SATELLITE show. “Guess how many LEO constellations didn’t go bankrupt – zero,” he said, name-checking the failed LEO operations in the late 1990s such as Teledesic, ICO, and the first inclination of Iridium. SpaceX will be first to market with the LEO broadband model, but is the company equipped to be a consumer Internet Service Provider? How much funding will SpaceX receive from the FCC’s Rural Digital Opportunity Fund?

Comtech and Gilat Merger and Falling Out

When Comtech Telecommunications announced it was acquiring Gilat Satellite Networks in January, the companies called it a perfect match, and it looked like the industry could see another productive tech merger in the style of ST Engineering and iDirect. Comtech planned to expand its portfolio with Gilat’s complementary technologies and bolster its position in the IFC and cellular backhaul markets. At the time, NSR senior analyst Lluc Palerm-Serra said the combined entity would control 80 percent of the cellular backhaul market.

Not only was it not to be, but the two companies had a very public falling out. The first sign of trouble was when Gilat CEO Yona Ovadia, who was supposed to stay on as CEO post-merger, resigned abruptly in July. Later that month, Comtech filed a lawsuit against Gilat, arguing that Gilat has suffered a Material Adverse Effect (MAE) due to the damage the COVID-19 pandemic caused the airline industry. Gilat rejected Comtech’s allegations, and accused Comtech of avoiding its contractual obligations. On top of COVID economic effects, Gilat’s business operations in Russia were also an issue.

In the end, the companies terminated their merger agreement, and Comtech agreed to pay Gilat $70 million. At the time, Carlos Placido NSR senior analyst, commented that the pandemic weighed strongly on how Comtech valued Gilat with Gilat's position in the IFC market. And Placido said that while the falling out was unprecedented between satellite tech companies, when most disagreements tend to be over patents, it may ultimately be viewed more as a casualty of the COVID-era than as a warning against future tech mergers.

Amazon Web Services and Microsoft Dig Into Space Business

Everybody wants a piece of the space industry — including tech titans Amazon and Microsoft. Amazon CEO and Founder Jeff Bezos has been a major name in the space industry for years, with Amazon’s planned LEO constellation Project Kuiper and the rise of his Blue Origin launch venture to compete with SpaceX. But this year, Amazon Web Services took a further step into the space industry by dedicating a new business segment to serve the aerospace and satellite industry — AWS Aerospace and Satellite Solutions. The new division will be led by retired U.S. Air Force Maj. Gen. Clint Crosier, former director of Space Force Planning at the U.S. Space Force. The division looks to leverage AWS cloud services to impact how data is collected and analyzed in the space industry. The announcement generated a lot of buzz for AWS, and the industry will be watching to see what moves the AWS division makes in 2020.

And AWS competitor Microsoft is right there as well. In September, the company announced it is getting into the satellite ground station business with Azure Orbital. Similar to AWS Ground Station launched in 2018, it’s a Ground Station as a Service (GSaaS) program, and it comes with partnerships with industry leaders SES, Kubos, Amergint, Kratos Defense, KSAT, Viasat, and US Electrodynamics Inc. Taking it even further, Microsoft also recently announced Azure Space, an Azure cloud product exclusively for the space industry. Microsoft has assembled a powerful group of industry partners for Azure Space, and the news came with connectivity agreements with SpaceX and SES. Competition to serve space companies between the two biggest names in cloud computing can only be a plus for the industry in this new digital age. VS

Correction: A previous version of this article misstated the voting breakdown on the C-band decision.